It’s time to move over from being Factory to the West

India should move away from being the ‘Factory to the West’ and aspire to be a top quality and high technology manufacturing destination if it has to achieve lofty job and growth targets.

India should move away from being the ‘Factory to the West’ and aspire to be a top quality and high technology manufacturing destination if it has to achieve lofty job and growth targets, corporates honchos said.

“For India to revive its manufacturing in a way that it can not only create jobs, but be the fulcrum of India’s next growth – its manufacturing has to become ‘Germany to the East,’” said the Manufacturing Leadership Survey 2012 by Boston Consulting Group (BCG) and Confederation of Indian Industry, echoing the views of about 70 senior management professionals across companies it sought.

The report said manufacturing excellence should be the country’s way to realise the targets set out in the government’s National Manufacturing Policy, which aims at a share of manufacturing of 25% in the gross domestic product (GDP) by 2022, about 12-14% medium-term growth in the sector and creation of 100 million jobs by 2022. Currently, manufacturing accounts 15% share of the sector in the GDP against 34% in China and 40% in Thailand.

The survey said India will have to focus on bolstering quality and extensively invest research and development and innovation.

Corporates too feel that most Indian sectors are lagging in R&D and innovation.

At a recent CII conference on manufacturing, Pawan Goenka, president – automotive and farm equipment sectors for M&M, said products such as XUV 500, Duster, Ertiga and Dost are successful examples of innovations.

“The entire manufacturing sector needs to aspire for that,” he said.

The CII-BCG report said India spends less than 1% of its GDP on R&D while it is 3.47% in Japan, 3.4% in South Korea, 2.81% for the US, and 1.55% for China.

Corporates claim it is the focus on newer sectors and skill development, which will play a pivotal role. “India is the largest importer of defence equipment. And that is one sector where India should focus to develop domestic abilities,” said K Venkatramanan, CEO and MD of Larsen & Toubro at a recent conference.